S T A T E   O F   N E W   Y O R K
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                                  6601

                            I N  S E N A T E

                            January 29, 2016
                               ___________

Introduced  by  Sen.  SEWARD -- read twice and ordered printed, and when
  printed to be committed to the Committee on Rules

AN ACT to amend the insurance law, in relation to  the  distribution  of
  dividends by domestic stock life insurers

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Subsection (a) of section 4207 of  the  insurance  law,  as
amended  by  a  chapter  of  the laws of 2015 amending the insurance law
relating to the distribution of dividends by domestic stock life  insur-
ers,  as proposed in legislative bills numbers S.1380-B and A.5202-B, is
amended to read as follows:
  (a)(1) FOR PURPOSES OF THIS  SUBSECTION,  "EARNED  SURPLUS"  MEANS  AN
AMOUNT EQUAL TO AN INSURER'S POSITIVE UNASSIGNED FUNDS, EXCLUDING EIGHT-
Y-FIVE  PERCENT  OF THE CHANGE IN NET UNREALIZED CAPITAL GAINS OR LOSSES
LESS CAPITAL GAINS TAX, FOR THE IMMEDIATELY PRECEDING CALENDAR  YEAR  AS
SET FORTH IN THE INSURER'S MOST RECENT ANNUAL STATUTORY FINANCIAL STATE-
MENT  FILED  WITH  THE  SUPERINTENDENT PURSUANT TO SECTION THREE HUNDRED
SEVEN OF THIS CHAPTER.
  (2) Notwithstanding paragraph  [two]  FIVE  of  this  subsection,  any
domestic  stock  life insurance company may distribute a dividend to its
shareholders OUT OF EARNED SURPLUS where the aggregate  amount  of  such
dividends in any calendar year does not exceed the greater of:
  (A)  ten percent of its surplus to policyholders as of the immediately
preceding calendar year; or
  (B) its net gain from operations for the immediately preceding  calen-
dar  year,  not  including  realized capital gains, not to exceed[:  (i)
fifteen percent of its surplus to policyholders as  of  the  immediately
preceding  calendar year, if its net gain from operations, not including
realized capital gains, has been negative in any  one  or  more  of  the
immediately  preceding  three  calendar  years or otherwise (ii) twenty-
five] THIRTY percent of its surplus to policyholders  as  of  the  imme-
diately  preceding calendar year; provided, however, that, notwithstand-
ing this paragraph, in no event may a dividend  be  distributed  without
approval  of the superintendent, in accordance with paragraph [two] FIVE

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
              

                                                           LBD06932-09-6

S. 6601                             2

of this subsection, in the calendar year immediately following a  calen-
dar  year for which its net gain from operations, not including realized
capital gains, was negative.
  [(2)]  (3)  NOTWITHSTANDING  PARAGRAPH  FIVE  OF  THIS SUBSECTION, ANY
DOMESTIC STOCK LIFE INSURANCE COMPANY MAY DISTRIBUTE A DIVIDEND  TO  ITS
SHAREHOLDERS  WHERE THE AGGREGATE AMOUNT OF SUCH DIVIDENDS IN ANY CALEN-
DAR YEAR DOES NOT EXCEED THE LESSER OF:
  (A) TEN PERCENT OF ITS SURPLUS TO POLICYHOLDERS AS OF THE  IMMEDIATELY
PRECEDING CALENDAR YEAR; OR
  (B)  ITS NET GAIN FROM OPERATIONS FOR THE IMMEDIATELY PRECEDING CALEN-
DAR YEAR, NOT INCLUDING REALIZED CAPITAL GAINS.
  (4) AN INSURER SHALL NOT DISTRIBUTE A DIVIDEND PURSUANT TO BOTH  PARA-
GRAPH TWO AND PARAGRAPH THREE OF THIS SUBSECTION.
  (5)  Except as provided in [paragraph one] PARAGRAPHS TWO AND THREE of
this subsection, no domestic stock life insurance company shall distrib-
ute any dividend to its shareholders unless a notice of its intention to
declare such dividend and the amount thereof shall have been filed  with
the superintendent not less than thirty days in advance of such proposed
declaration.  The  superintendent  may  disapprove  such distribution by
giving written notice to such company  within  thirty  days  after  such
filing  that  [he] THE SUPERINTENDENT finds that the financial condition
of the company does not warrant such distribution.
  [(3)] (6) With respect to dividends to shareholders distributed pursu-
ant to paragraph [one] TWO of this subsection, every domestic stock life
insurance company shall report to the superintendent all such  dividends
within five business days following the declaration thereof and at least
ten days prior to the payment thereof.
  [(4)] (7) A domestic stock life insurance company's surplus to policy-
holders  following  any  distribution  of  dividends to its shareholders
under paragraph [one] TWO of this  subsection  shall  be  reasonable  in
relation  to  the company's outstanding liabilities and adequate to meet
its financial needs.
  (8) WITH RESPECT TO DIVIDENDS TO SHAREHOLDERS DISTRIBUTED PURSUANT  TO
PARAGRAPH TWO OF THIS SUBSECTION, THE SUPERINTENDENT MAY LIMIT OR DISAL-
LOW DIVIDENDS IF THE SUPERINTENDENT DETERMINES THAT THE:
  (A)  DOMESTIC  STOCK LIFE INSURANCE COMPANY'S SURPLUS TO POLICYHOLDERS
IS NOT REASONABLE IN RELATION TO THE COMPANY'S  OUTSTANDING  LIABILITIES
AND NOT ADEQUATE TO MEET ITS FINANCIAL NEEDS; OR
  (B) DOMESTIC STOCK LIFE INSURANCE COMPANY IS FINANCIALLY DISTRESSED OR
TROUBLED.
  S  2.  This  act  shall  take  effect on the same date and in the same
manner as a chapter of the laws  of  2015  amending  the  insurance  law
relating  to the distribution of dividends by domestic stock life insur-
ers, as proposed in legislative bills  numbers  S.1380-B  and  A.5202-B,
takes effect.